The numbers: New-home sales surge higher
Sales of new homes in the U.S. rose in September, even though home prices rose to a new high.
U.S. new-home sales increased 14% to an annual rate of 800,000, the government said Tuesday. That figure represents the number of homes that would be sold over a yearlong period of time if the same number of properties were bought each month based on the rate of sales in September. Compared to a year ago, sales were down 17.6%.
The median forecast of economists polled by MarketWatch was that new home sales would come in at an annual rate of 760,000 for September.
The new-home sales report from the U.S. Census Bureau, unlike the existing-home sales report from the National Association of Realtors, reflects sales where the contract is signed but the transaction has not yet closed. The report’s small sample size also means that it is quite volatile and prone to large revisions.
What happened
The median sales price of new houses sold in September was $408,800, marking a new record high. The supply of new homes for sale fell by more than 12% between August and September, equating to a 5.7-month supply.
Regionally, the Northeast notched the largest percentage gain in new-home sales, while the Midwest was the only part of the country to record a decrease, as was the case the month prior.
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The big picture
As Pantheon Macroeconomics chief economist Ian Shepherdson noted, Americans may be seeing “something of a revival in the housing market.” Both new and existing home sales have rebounded from the downturn earlier this year. A mix of factors could be at play.
“A combination of lower rates, easier lending standards and, perhaps, a renewed bout of COVID fear in cities, has driven the turnaround, which appears to be continuing in October, though perhaps at a slowing pace,” Shepherdson wrote in a research note.
To his latter point, rising mortgage rates could price out some home buyers at the margins, which could become a headwind for the market in the months to come.
What they’re saying
“Noticeably, the cost of lumber bounced off the August bottom of around $400, moving into the mid-$600s per thousand board feet. The increase ensured that homebuilders kept higher prices, pushing the median new home sale price up double-digits from a year ago,” said George Ratiu, manager of economic research for Realtor.com.
Market reaction
The Dow Jones Industrial Average and S&P 500 index both increased in Tuesday morning trades.
Major home-builder stocks such as D.R. Horton, Lennar Corp. and PulteGroup turned positive following the new home sales report’s release.